Question

Two methods are used to predict how many customers will call in for help in the next four days. The first method predicts the numbers of callers to be 23, 5, 14, and 20 for the four respective days. The second method predicts 20, 13, 14, and 20 for the four respective days. The actual numbers of callers turn out to be 23, 10, 15, and 19. Which method has the bigger forecast bias?

Answer 1

Answer:

The method 1 will have a bigger forecast bias ( whose value is 5 ) than the method 2 ( whose value 0 ).

Explanation:

To know which method will have the bigger forecast bias , we will see the deviation of both methods from the actual forecast numbers and then by seeing which one is having a bigger deviation value , we can say which one is having bigger forecast bias.

FORECAST BIAS = ACTUAL NUMBER - FORECAST NUMBER

Actual           Forecast        Forecast        Forecast             Forecast

caller turn      method 1       method 2      bias method 1    bias method 2

23                    23                  20                  0                           3

10                     5                    13                   5                           -3

15                     14                   14                   1                             1

19                     20                  20                 -1                            -1

TOTAL                                                          5                             0

from the above information we can say that the method 1 with forecast bias value of 5 is much bigger than the method 2 with forecast bias value of 0.